Case Law Details
Mr. Mohan Sambhaji Jagthap Vs ACIT (ITAT Delhi)
Appreciating the material on record it can be observed that the Tax Authorities have not doubted the assertion of the Assessee that the father in law was resident of Canada or he held land. When this fact is admitted, the Revenue needed to conduct some enquiry and collect material to rebut the claim of the Assessee. Which was not done. However, the ld CIT(A) has discredited the claim on the reason that no evidence whatsoever has been brought which could relate the cash to the agricultural income of the father in law. He failed to appreciate that the deposit relates back to year 2001-02 and the assessment was initiated in 2015. No prudent man could be expected to keep record of sale proceeds of such small amount of Rs 20,000/. Presumption is of truthfulness of a claim made before an authority when a false claim gives rise to penal action. So, claim of Assessee that he held source was agricultural income and he held it as custodian deserved to be allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeal has been preferred by the Assessee against the order dated 05.09.2016 of Ld Commissioner of Income Tax (Appeals)-23, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. „FAA’) in appeal No. 389/15-16 arising out of an appeal before it against the order dated 28.01.2016 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as „the Act’) by the ld. AO, Assistant Commissioner of Income Tax, Central Circle-3, New Delhi (hereinafter referred as the Ld. AO).
2. The facts in brief are that search and seizure action u/s 132 of the Income Tax Act, 1961 was carried out in Shri Suresh Nanda Group of cases on 28.02.2007 and notice u/s 153A was issued and served to the Assessee on 09.09.2008, upon which the Assessee had filed return of income declaring income of Rs. 1,06,641/- on 06.10.2009. Notice u/s 143(2) was issued on 09.10.2009 and assessment order u/s 143(3) read with section 153A was passed on 29.12.2009. However, the ITAT had set aside the assessment order and given fresh de novo adjudication order. Accordingly, fresh notices were issued. As the Assessee failed to substantiate the source of deposit of Rs. 20,000/- it was considered as unexplained and added to the income. Further, based upon the documents dated 07.05.2001 and drawing presumption u/s 292C of the Act amount of Rs. 18,76,164/- was made taxable income of the Assessee. Another addition was made of Rs. 7,26,000/- being unexplained deposit. In appeal the ld CIT(A) had upheld the addition of Rs. 20,000/- while deleting the addition of Rs. 18,76,164/- and the addition of Rs. 7,26,000/- was deleted.
3. Now the Assessee has come in appeal raising following grounds of appeal:-
“1. That the learned CIT (A) has erred in law and on the facts by confirming the order of learned Assessing Office by deciding he case against assesse and by not providing proper relief to the assesse on the ground presented to CIT (A).
2. That the order passed by the Ld. CIT (A) is against the Principal of Natural Justice.
3. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. Assessing Officer by making additions merely on the basis of assumptions.
4. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in making an addition of Rs. 20,000 in assessment year 2002-03, In any view of the matter and in any case, addition of Rs. 18,76,164 is bad in law and against the facts and circumstances of the case.”
4. Heard and perused the records. On behalf of the Assessee it was submitted that the father in law of Assessee is owner of land from which agricultural income was generated and the money was received by the Assessee as father in law is resident of Canada. He was merely custodian of the amount but Ld. Tax Authorities have failed to appreciate it.
5. The Ld. DR however supported the orders of the Ld. Tax Authorities submitting that onus was on Assessee to show that the amount was held as custodian.
6. Appreciating the material on record it can be observed that the Tax Authorities have not doubted the assertion of the Assessee that the father in law was resident of Canada or he held land. When this fact is admitted, the Revenue needed to conduct some enquiry and collect material to rebut the claim of the Assessee. Which was not done. However, the ld CIT(A) has discredited the claim on the reason that no evidence whatsoever has been brought which could relate the cash to the agricultural income of the father in law. He failed to appreciate that the deposit relates back to year 2001-02 and the assessment was initiated in 2015. No prudent man could be expected to keep record of sale proceeds of such small amount of Rs 20,000/. Presumption is of truthfulness of a claim made before an authority when a false claim gives rise to penal action. So, claim of Assessee that he held source was agricultural income and he held it as custodian deserved to be allowed.
Consequently, the appeal is allowed and the impugned order is set aside.
Order pronounced in the open court on 27/05/2022.
